Business leaders push for tax cuts to boost flagging economy

SCOTT MACNAB

Business leaders are calling for “targeted” tax cuts after a new survey revealed that ­Scotland’s economy remains “subdued”.

The Scottish Chambers of Commerce’s quarterly economic indicator for the first quarter of the year found a mixed picture, with business optimism in tourism, retail and wholesale being negative but finance and business services having the most positive outlook since the end of 2014.

The report found that profitability and cashflow remain “challenging” and pressure on prices is high.

Finance and business service firms were said to be at a “turning point”, with many key balances improved, including sales revenue, despite two years of negative net balances for profits and cash flow.

Business optimism in construction remains positive but has fallen 18 percentage points in a year, while manufacturing optimism rose nine percentage points in the same period with “strong” export sales.

More than a third (36 per cent) of retail and wholesale businesses reported falling optimism, and the sectors recorded declines in cash flow, sales employment, profitability and capacity.

In tourism, the number of customers was up 13 percentage points on last year but sales revenue fell by the same amount. Investment and employment have declined over the quarter.

The number of tourism businesses reporting declining cashflows hit a record low, which the report said may be due to falling guest numbers from overseas.

Scottish Chambers of Commerce economic advisory group chairman Neil Amner said: “In January, our survey warned that Scotland’s economy stood on a knife-edge and these latest figures point to continued subdued performance in the early part of this year.

“However, the picture across the various sectors is less even than it was at the end of 2016, with the manufacturing sector recording very encouraging results, again driven by exports.

“The financial and business services sector has also rebounded significantly from its position at the beginning of 2016, though this is at least in part as a result of a significant improvement in the prospects of oil and gas service sector businesses from a low base.

“The outlook for construction is again fairly flat and performance in both retail and wholesale, and in tourism, looks to be negative in comparison to the same period last year, though the first quarter has in the past proved to be a difficult period.”